Interim Results

Gresham Computing PLC 22 September 2003 Embargoed until 07.00 22 September 2003 GRESHAM COMPUTING plc ('Gresham', the 'Group' or the 'Company') INTERIM RESULTS FOR THE SIX-MONTHS ENDED 30 JUNE 2003 Financial Highlights To 30 June To 30 June 2003 2002 Turnover £4.9m £6.2m Operating loss £1.2m £1.9m Profit before tax (£1.1m) £2.7m Basic earnings per share (2.24p) 4.94p Gresham Computing plc, provider of enterprise software and solutions, announces its interim results for the six-months ended 30 June 2003. The main results highlights are as follows: • Operating loss down 40% to £1.2m • Primary focus is on delivering C&W Real Time Nostro • C&W Real Time Nostro now undergoing advanced operational testing • Integration & Storage divisions continue to face challenging market conditions • Period-end cash balance of £6.3m Andrew Walton-Green, Chief Executive Officer of Gresham, commented: 'Although trading conditions have become no easier we have reduced our operating losses by 40%. The Group's principle focus remains on assisting Cable & Wireless to deliver the Cable & Wireless Real Time Nostro ('RTN') service to the market. Considerable progress has been made towards this goal and, at SIBOS next month, the capabilities and competitive advantages of RTN will be demonstrated to the wider banking community. 'Our focus is to deliver the significant medium and long term growth that we believe the Group has the potential to achieve.' For further information, please contact: Gresham Computing plc 020 7653 0228 Andrew Walton-Green, Chief Executive Officer Weber Shandwick Square Mile 020 7067 0700 Tim Jackaman Christian Taylor-Wilkinson Embargoed until 07.00 22 September 2003 GRESHAM COMPUTING plc ('Gresham', the 'Group' or the 'Company') INTERIM results for the SIX-MONTHS ended 30 JUNE 2003 I am pleased to report the Group's interim results for the six-months ended 30 June 2003. The Group's turnover for the period was £4.9 million (2002: £6.2 million). The operating loss was £1.2 million (2002: £1.9 million). Loss before taxation was £1.1 million (2002: £2.2 million loss before the profit on disposal of SIM, £2.7 million profit including the disposal of SIM) with a retained loss for the period of £1.1 million (2002: £2.3 million profit). The resultant loss per share is 2.24 pence. The decrease in turnover is largely attributable to our contract staff and recruitment agency. Trading conditions have become no easier than I indicated in my last report. Notwithstanding this, we have significantly reduced the level of operating loss and continued to invest in the development of the business. The Group's financial position has been strengthened during the period by the raising of £3.9 million though a share placement. As a result the net funds position has increased from £3.9 million at 31 December to £6.3 million at 30 June. Strategy We have continued our strategy of focusing on the core areas of the business; Banking, Integration and Storage. Banking The utilisation of real time information has become a major focus of the banking sector. This focus will be evident at the major Industry exhibition of the year, SIBOS, which is being held in Singapore from the 20th to 24th October. Our primary focus in this area continues to be in the delivery of the application software and marketing support to Cable & Wireless to assist them to deliver the Cable & Wireless Real Time Nostro ('C&WRTN') service to the market. Considerable progress has been made in the past few months. The announcement made by Cable & Wireless on 15 May that four banks, ANZ Bank, Barclays, JP Morgan Chase and Mizuho Corporate Bank, had agreed to provide data and to act as a channel to market for the service was a critical step towards establishing the service commercially. The C&WRTN service is now undergoing advanced operational testing in readiness for full operational deployment. C&WRTN continues to be well received by the market. Cable & Wireless have indicated that discussions are advanced with a number of further major financial institutions regarding data provision and use of their service. At SIBOS the capabilities and competitive advantages of C&WRTN will be demonstrated to the wider banking community. C&WRTN will be a subscription based service and the Group will receive a share of these revenues through its revenue sharing arrangement with Cable & Wireless. Your board believes that although revenue from C&WRTN will not be significant in 2003, it will build significantly over the coming years. Integration Although our integration business has continued to create considerable interest, particularly in the Finance and Banking sector, this interest is yet to result in increased revenue in the year to date. We are actively developing partnerships in order to increase our routes to market for our integration product, Casablanca. We consider that our proven integration and development capabilities will enable the level of opportunities to be sustained and converted into an increasing revenue stream. Storage The market for storage products remains difficult particularly in the key US market. We have expanded our current niche product range by increasing the number of hardware platforms it serves. In addition we have continued to develop our new product in order to enhance our offering to a wider storage market. Outlook As I reported in April, we consider that C&WRTN is our most significant market opportunity and that it has the potential to deliver the most substantial returns in the Group's history. The continuing progress on C&WRTN has moved us much closer to realising this opportunity. Although progress has been slower than we hoped in the other strategic areas of our business, we believe that they continue to have the potential to deliver shareholder value. Our focus is to deliver the significant medium and long term growth that we believe the Group has the potential to achieve. Once again I must thank the staff and shareholders for their loyalty and contribution to the progress we have made during the past few months. Sid Green Chairman 22 September 2003 For further information, please contact: Gresham Computing plc 020 7653 0228 Andrew Walton-Green, Chief Executive Officer Weber Shandwick Square Mile 020 7067 0700 Tim Jackaman Christian Taylor-Wilkinson GRESHAM COMPUTING plc GROUP PROFIT AND LOSS ACCOUNT for the six months ended 30 June 2003 Six months Six months Year ended 31 ended 30 June ended 30 June December 2003 2002 2002 Notes £'000 £'000 £'000 Group turnover 2 4,870 6,152 11,578 Cost of sales 2,374 3,853 6,707 ---------- ---------- ---------- Gross profit 2,496 2,299 4,871 Administrative expenses 3 3,680 4,235 8,412 ---------- ---------- ---------- Operating loss (1,184) (1,936) (3,541) Share of operating loss in associate - (396) (398) ---------- ---------- ---------- Total operating loss: group and share of associate 3 (1,184) (2,332) (3,939) Profit on sale of operations (discontinued operations) - 4,902 4,881 ---------- ---------- ---------- (Loss)/profit on ordinary activities before interest and taxation (1,184) 2,570 942 Net interest receivable 116 104 206 ---------- ---------- ---------- (Loss)/profit on ordinary activities before taxation (1,068) 2,674 1,148 Taxation on (loss)/profit on ordinary activities 4 (11) 371 (27) ---------- ---------- ---------- (Loss)/profit on ordinary activities after taxation (1,057) 2,303 1,175 ---------- ---------- ---------- Retained (loss)/profit for the period (1,057) 2,303 1,175 ========== ========== ========== Basic earnings per share (pence) 5 (2.24) 4.94 2.51 Diluted earnings per share (pence) 5 (2.24) 4.87 2.45 GROUP BALANCE SHEET at 30 June 2003 at 30 June at 30 June at 31 December 2003 2002 2002 £'000 £'000 £'000 Fixed assets Intangible assets 1,067 1,190 1,121 Tangible assets 1,413 1,648 1,556 -------- -------- --------- 2,480 2,838 2,677 -------- -------- --------- Current assets Debtors 5,502 5,251 4,861 Cash at bank and in hand 6,327 5,284 4,009 -------- -------- --------- 11,829 10,535 8,870 Creditors: amounts falling due within one year 3,478 4,350 3,498 -------- -------- --------- Net current assets 8,351 6,185 5,372 -------- -------- --------- -------- -------- --------- Total assets less current liabilities 10,831 9,023 8,049 -------- -------- --------- Creditors: amounts falling due after more than one year 674 588 742 -------- -------- --------- 10,157 8,435 7,307 ======== ======== ========= Capital and reserves Called up share capital 2,430 2,349 2,350 Share premium account 9,529 5,699 5,701 Special reserve 313 313 313 Merger reserve 726 726 726 Profit and loss account (2,841) (652) (1,783) -------- -------- --------- Shareholders' funds - equity interests 10,157 8,435 7,307 ======== ======== ========= GROUP STATEMENT OF CASH FLOW for the six months ended 30 June 2003 Six months ended Year ended 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 Operating loss (1,184) (1,936) (3,541) Depreciation 210 288 467 Amortisation 54 84 153 Loss on disposal of fixed assets - 3 - Increase in debtors (630) (141) (286) (Decrease)/increase in creditors (14) 113 (16) Foreign exchange movement (9) (9) - ------- ------- -------- Net cash outflow from operating activities (1,573) (1,598) (3,223) ------- ------- -------- Dividend received from associated undertaking - - 79 Returns on investment and servicing of finance Net interest received 113 112 204 Dividends paid to preference shareholders - (66) (66) ------- ------- -------- 113 46 138 ------- ------- -------- Taxation paid (13) (27) (38) ------- ------- -------- Capital expenditure and financial investment Payments to acquire tangible fixed assets (41) (140) (194) Receipts from sale of tangible fixed assets - 44 3 ------- ------- -------- (41) (96) (191) ------- ------- -------- Acquisitions and disposals Disposal of subsidiary undertaking - 6,220 - Disposal of associated undertaking - - 6,751 Costs of disposal (16) (3) (173) ------- ------- -------- (16) 6,217 6,578 ------- ------- -------- Financing Repayment of short-term loans - (250) (250) Repayments of finance leases (60) (68) (130) Net proceeds of shares issued 3,908 102 105 ------- ------- -------- Net inflow/(outflow) from financing 3,848 (216) (275) ------- ------- -------- Increase in cash in the period 2,318 4,326 3,068 ======= ======= ======== Group net funds Opening net funds 3,928 513 513 Closing net funds 6,288 5,157 3,928 NOTES TO THE INTERIM FINANCIAL STATEMENTS at 30 June 2003 1 The interim financial statements have been prepared on the basis of the accounting policies set out in the Group's 2002 statutory financial statements and are unaudited. The interim financial statements do not constitute statutory financial statements within the meaning of section 240 of the Companies Act 1985. 2 Turnover and segmental analysis All turnover relates to continuing operations. Analysis of turnover by business segment: Six months ended 30 June 2003 Six months ended 30 June 2003 Inter- Inter- Segment Segment External Segment Segment External turnover turnover turnover turnover turnover turnover £'000 £'000 £'000 £'000 £'000 £'000 Solutions 1,453 - 1,453 1,518 (18) 1,500 Specialist contract staff 988 (7) 981 2,026 (36) 1,990 ---------------------------------------------------------------------------- Enterprise solutions 2,441 (7) 2,434 3,544 (54) 3,490 Enterprise software 2,436 - 2,436 2,694 (32) 2,662 ---------------------------------------------------------------------------- 4,877 (7) 4,870 6,238 (86) 6,152 ---------------------------------------------------------------------------- Geographical analysis of turnover by source: Six months ended 30 June 2003 Six months ended 30 June 2003 Inter- Inter- Segment Segment External Segment Segment External turnover turnover turnover turnover turnover turnover £'000 £'000 £'000 £'000 £'000 £'000 United Kingdom 2,950 (12) 2,938 4,030 (11) 4,019 North America 1,128 (24) 1,104 1,055 (9) 1,046 Rest of World 1,198 (370) 828 1,693 (606) 1,087 5,276 (406) 4,870 6,778 (626) 6,152 Geographical analysis of turnover by destination: Six months ended 30 June June 2003 2002 £'000 £'000 United Kingdom 2,675 3,876 Europe 375 802 North America 774 702 Rest of World 1,046 772 4,870 6,152 3 Operating loss Included within administrative expenses in the year ended 31 December 2002 is £252,000 relating to exceptional reorganisation and restructuring costs. There are no such costs in the 6 months ended 30 June 2002 and 6 months ended 30 June 2003. 4 Earnings per share Earnings per share has been calculated in accordance with FRS 14 using the following earnings and weighted average shares outstanding: Six months ended Year ended 30 June 30 June 31 December 2003 2002 2002 Earnings £'000 £'000 £'000 Basic and fully diluted earnings (1,057) 2,303 1,175 (1,057) 2,303 1,175 Weighted average number of shares Basic weighted average 47,186,369 46,636,479 46,816,200 Potential ordinary shares - 688,605 1,197,072 Fully diluted weighted average 47,186,369 47,325,084 48,013,272 Diluted earnings per share are identical to basic earnings per share for the 6 months ended 30 June 2003 because potential diluting events would have the effect of reducing the loss per ordinary share. 5 Reconciliation of shareholders' funds Six months ended Year ended 30 June 30 June 31 December 2003 2002 2002 £'000 £'000 £'000 (Loss)/profit for the period (1,057) 2,303 1,175 Exchange difference on retranslation of net assets of subsidiary undertakings (1) 2 (1) Total recognised gains and losses (1,058) 2,305 1,174 Shares issued 3,908 102 105 Total movements during the year 2,850 2,407 1,279 Opening shareholders' funds 7,307 6,028 6,028 Closing shareholders' funds 10,157 8,435 7,307 6 An interim report will be sent to all shareholders by 30 September 2003 and will be available to all members of the public during normal business hours at the company's registered office: Sopwith House, Brook Avenue, Warsash, This information is provided by RNS The company news service from the London Stock Exchange

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